What is an IRS Audit?

                                       What is an IRS Audit?

An Audit is the Process by which the IRS determines whether you properly reported all income - from earnings and investments-and took the correct deductions, exemptions, and credits. If the IRS finds that you didn't, you will be assessed additional taxes, interest, and -usually-penalties.

An assessment is the formal entry of a tax liability in your records.

To do its job, Congress has given the IRS wide powers to inspect your financial records and to ask you and others about your financial affairs, to determine whether you are cheating UNCLE SAM (Internal Revenue Code 7601 & 7602).

Proving the correctness of your tax return may not be that easy. The IRS wins over 80% of all audits, mostly because taxpayers cant properly verify the information on their tax returns. IRS Auditors say that the biggest reason for Adjustments is poor recordkeeping, not taxpayer dishonesty.

This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC

Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations and collections divisions of the IRS and various state taxing authorities. For speaking engagements email noah.daniels@advancetaxrelief.com.

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Tax Tips for Newlyweds

                                                   Tax Tips for Newlyweds

Updating your status from single to married may bring about some unanticipated changes, including changes relating to your taxes. While wedding planners don’t typically use an IRS checklist, here are a few things to keep in mind when filing your first tax return as a married couple. As with any tax issue, contact your tax professional to help you navigate your own unique situation.

Notify the Social Security Administration (SSA)

If one of you has taken on a new name, report the change to the SSA. File Form SS-5, Application for a Social Security Card. It is important that your name and Social Security number match on your tax return. The IRS will match your information with records provided by the SSA and, if the records don’t match, any electronically filed return will be rejected and any paper filed return will have the mismatched individual’s personal exemption cancelled until the error is corrected. Avoid making a name change too close to tax season. While the SSA can process a name change in about two weeks, the delay in data sharing between the SSA and the IRS can make any change near the end of the year problematic. In such situations, it may be advisable tofile the tax return using your maiden name and change your name with the SSA after the return has been filed. Form SS-5 is available on the SSAs website at www.ssa.gov, by calling 800-772-1213, or by visiting a local SSA office. A copy of your marriage certificate and driver’s license or passport will be required

 

Notify the IRS If You Move
The IRS will automatically update your new address upon filing your next tax return, but any notices the IRS sends in the meantime may not get to you. The U.S. Postal Service does not forward certain types of federal and certified IRS mail. IRS Form 8822, Change of Address, is the official way to update the IRS of your address change. Download Form 8822 from www.irs.gov or order it by calling 800-TAX-FORM (800)-829-3676.

 

Notify Your Employer
Report your name and/or address change to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.

 

Notify Financial Institutions
Financial institutions with which you do business need to be notified to ensure that any Forms 1099 are sent to the proper address. This would include banks and brokerage firms, as well as employer-sponsored retirement plans.

 

Check Your Withholding
If you both work, keep in mind that you and your spouse’s combined income may move you into a higher tax bracket. The IRS Withholding Calculator, available at www.irs.gov, can help you determine whether you need to give your employer(s) a new Form W-4, Employee’s Withholding Allowance Certificate. Use the results to fill out and print Form W-4 online and give it to your employer(s).

 

Select the Right Tax Form
Choose your individual income tax form wisely because it can help save you money. Newlywed taxpayers may find that they now have enough deductions to itemize on their tax returns, rather than taking the standard deduction. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ.

Choose the Best Filing Status

Your marital status on December 31 determines whether you are considered married for that entire year for tax purposes. The law generally allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax. For most married couples, filing jointly will result in a lower tax liability. This is especially true if there is a significant difference in your incomes. The so-called “marriage penalty” only applies to couples who both earn relatively high salaries. Certain situations may make it more advisable for married taxpayers to file separately.

• If both spouses have their own itemized deductions, such as medical deductions, they may be able to claim higher overall deductions because of the percentage limitations on Schedule A.

• If one spouse has past due debt with the IRS or another government agency, such as child support obligations or student loans, filing separately will prevent the other spouse’s share of any refund from being used to offset debts for which he or she is not liable.

• If one spouse has messy or missing records, or is thinking of taking a risky tax position, the other may want to file separately to avoid becoming liable for potential additional taxes or penalties. Planning for your wedding may be over, but don’t forget about planning for the tax-related changes that marriage brings. More information about changing your name, address, and income tax withholding is available on www.irs.gov, or contact your tax professional.

Simple Projections

Based on your tax information from last year, it will be easy to prepare a dummy return to show what your tax situation would be if you had been married. You can print out Form 1040, other tax forms, and tax tables from www.irs.gov. On the blank forms, combine tax information from last year’s returns. For example, combine the wage amounts from both returns and enter the total on Form 1040, line 7, of the blank form. Do the same for items such as interest, other income, and include deductions if either person itemized. Use filing status, deductions, and exemption amounts as if you had been married. The resulting tax and refund or amount due will give you an indication of whether your current withholding is sufficient to cover your tax liability when incomes are combined and will also help identify any problems that may need to be addressed when you file as married taxpayers.

This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC

Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations and collections divisions of the IRS and various state taxing authorities. For speaking engagements email noah.daniels@advancetaxrelief.com.

ADVANCE TAX RELIEF LLC - "WE SOLVE YOUR TAX PROBLEMS"

8449 W. BELLFORT, SUITE 356
HOUSTON, TX 77071
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Tips for Taxpayers Who Receive an IRS Notice

                         Tips for Taxpayers Who Receive an IRS Notice

Receiving a notice from the Internal Revenue Service is usually no cause for alarm. Every year the IRS sends millions of letters and notices to taxpayers. In the event one shows up in the mailbox, here are ten things you should know.

1) Don’t panic. Many of these letters can be dealt with very simply.

 

2) Don’t ignore it. Most of these letters have a “reply by” date. Inaction can lead to additional interest and penalties or more aggressive action from the IRS.

 

3) Call your tax professional. Your tax professional is available to help you, is familiar with your situation, and has experience dealing with the IRS. Utilize his or her expertise. He or she will generally want to see a copy of the letter to determine the next course of action. Some letters can be resolved simply by having you contact the IRS directly. Other, more complicated issues may require you to sign Form 2848, Power of Attorney and Declaration of Representative, to allow your tax professional to deal with the IRS on your behalf.

 

4) There are a number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account, or request additional information. The notice you receive normally covers a very specific issue about your account.

 

5) Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry.

 

6) If you receive a notice about a correction to your tax return, you should review the correspondence and compare it with the information on your return.

 

7) If you agree with the correction to your account, usually no reply is necessary unless a payment is due.

8) If you do not agree with the correction the IRS made, it is important that you respond as requested. Respond to the IRS in writing to explain why you disagree. Be courteous and respectful. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left corner of the notice. Allow at least 30 days for a  response from the IRS.

 

9) Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right corner of the notice. When you call, have a copy of your tax return and the correspondence available.

10) Keep copies of any correspondence with your tax records. As with any tax issue, contact your tax professional to help you navigate your own unique situation.

 

This article contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information or contact Advance Tax Relief LLC

 

Noah Daniels, EA is the President of Advance Tax Relief LLC based in Houston, TX. Noah is very experienced in representing taxpayers before the examinations and collections divisions of the IRS and various state taxing authorities. For speaking engagements email noah.daniels@advancetaxrelief.com.

 

 

ADVANCE TAX RELIEF LLC - "WE SOLVE YOUR TAX PROBLEMS"

8449 W. BELLFORT, SUITE 356

HOUSTON, TX 77071

www.advancetaxrelief.net

 

visit and like our facebook page to receive free tax planning tips  http://www.facebook.com/pages/ADVANCE-TAX-RELIEF-LLC/159880007482847?ref=stream

 

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CORRECTING ERRORS IN YOUR TAX RETURN, IRS

If you omit some information from your tax return, make an error or miss a tax-filling deadline, it doesn't have to be a major problem. However, you should take prompt action to set things right. If can be less expensive and less complicated to correct errors before receiving notices from the IRS. Form you may use to report corrections include:

Form 94X, Employment Tax Adjustment: When employers discover errors made resulting in overpayment or underpayment of employment taxes.

Form W-2C, Corrected Wage and Tax Statement.Form W-3C, Transmittal of Corrected Wage and Tax Statement. These form are used to correct the information about your employees total earnings and withholdings for the tax year.

Form 1040X: Amended U.S Individual Income Tax Return. If you made a mistake on your individual tax return, use this form to correct any errors.

other forms include 1120X, 1099 & 1098.

If you receive a letter from the IRS, open it, read it, and respond promptly.
If you have any tax questions email noah.daniels@advancetaxrelief.com.

At Advance Tax Relief, We solve your tax problems.

Call us for your IRS and State Tax Problems. Find out about our all-inclusive tax resolution deal and get your 2012 tax returns prepared for free.

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